Chapter 4 l6n5a

CHAPTER 4

FRANCHISOR MANAGEMENT: ORGANIZATION AND ISTRATIVE POLICY

Learning Outcomes      

Learn about the functions of franchisor management in a franchise system. Understand franchisor management practices and their importance to a franchisor. Learn the tends commandments of a successful franchise organization Investigate leadership principles important to franchising Understand importance of quality and quality controls in franchises Learn about franchisee advisory councils and how they operate.

Functions of franchisor management in a franchise system 

Characteristics of a Successful Franchisor: ◦ Personal factors: Motivation; Abilities, and Attitudes ◦ Environmental factors:  Governmental Regulation  Financial Accessibility  Genuine Business Opportunity

◦ Organizational factors:  Strategic Plans  Policies to Franchisees

◦ Hard-working

Franchisor Development 

Strategic Development ◦ Vision ◦ Products and Services provided

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istrative Development ◦ Organization ◦ Finances ◦ Human Resource

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Operations Development ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦

Advertising ing Management Production Training Distribution Operations Field Staff; Marketing Research

Six Major Organizational Development Tasks 

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1. Identify and define market Niche to create competitive advantages for the franchise firm 2.Design products and/or Services to meet wants, needs, and expectations of the target customers; 3. Develop policies and plans for controlling the Franchise system 4. Acquire Financial and Human Resources; Recruitment and Selection of franchisees, solicit and train franchisees 5. Refine operational systems to accommodate franchisees units and develop management systems to oversee, monitor, and guide franchise system development. 6. Develop an understandable and acceptable franchise organization culture ◦ Affirm or re-identify and define Niche ◦ Start task 1 again.

Strategic Management of a Franchisor Vision Mission External -Customer -Government -Competitors -Suppliers -Financial Resources -Technology

Objectives Environmental Scanning Situation Audit SWOT analysis Franchise System Strategies

Internal -Resource Capability -Location -Culture -Structure -Technology

Set Priorities for Strategic Decisions on Building a Franchise Business     

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To establish and maintain high performance of the franchisor and franchisees To be state of the art in products and services To gain and maintain market shares with quality service to customers Continually improve efficiency, quality and strong financial returns Develop competent and committed workforce Position the franchise system in long .

Franchisee Selection 

McDonald’s: ◦ Entrepreneurial Spirit and Strong desire to Succeed ◦ Ability to motivate and train people ◦ Ability to manage finances ◦ Willingness to personally devote full-time and best efforts to day-to-day operations on premises franchisees ◦ Willingness to complete comprehensive training and evaluation program ◦ Financial Qualifications

Leadership principles important to franchising 

Directing

◦ Giving directives: oral forms; written directives; orders given to franchisees ◦ Supervising ◦ Leading ◦ Motivating and Communicating 

Controlling ◦ Appraisal of performance of subordinate managers ◦ Appraisal of policies ◦ Appraisal of financial transactions

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Deg franchisor policies Motivating Innovating

Ten commandments of a successful franchise organization          

1. Leadership 2. Staying with the business one understands 3. Developing and maintaining a unique niche 4. Keeping firsthand touch with customers 5. Relentless pursuits of management principles and fundamentals 6. Organization 7. Freedom from government interventions 8. Strong Fiscal Responsibilities 9. Strategic Development 10. Picking winners

Quality and quality controls in franchises Quality of Sales services  Quality of products  Service Time: lead time between order and receiving the goods.  Regularly organizing survey to learn about customer satisfaction. 

Franchisee Advisory Councils 

How to establish the council? ◦ By the franchisor’s group of appointed and elected . ◦ By several franchisees’ group of appointed and elected ◦ The franchisor and franchisees tly set up the councils

Franchisee Advisory Councils 

Benefits of the FAC: ◦ Help develop mutual trust ◦ Improve communication in the franchise system ◦ Handle policy changes, product introduction, program development, ◦ Improve sales, motivation, the entire franchise system ◦ Strengthen the franchisor-franchisee relationship.

Franchisee Advisory Councils 

Areas of advisory matters: ◦ ◦ ◦ ◦ ◦

Operations Marketing Products and services Finance Grievances

Topic Discussion (Homework) Read a Case Study on pages: 93-94  Discuss and answer all the questions. 

Class Discussion Read a Case on page 131.  Answer the relevant questions 